Bull run bonanza yields almost ₹1 lakh crore in exits for PE/VC investors

• PE/VC investors raked in ₹97,500 crore via exits from 78 companies in 2023.
• Midcaps accounted for 50% of the total exit deals at ₹48,700 crore.
• Foreign investors like Softbank and Warburg Pincus sold stock worth ₹81,200 crore.
  

Thanks to the bull run which has also seen the market change its view on new-age companies — the year gone by has been spectacular for private equity and venture capital (VC) investors. Combined, they have raked in almost ₹1 lakh crore (₹97,500 crore to be precise) via exits from 78 companies, as per a report by Nuvama.

“The robust secondary market presented PE/VC firms with a golden opportunity for profitable exits, thanks to a consistent influx of flows, notably from domestic institutional investors (DIIs). Consequently, 2023 witnessed record-breaking PE/VC exits via secondary markets in India's equity history,” the report said.

It also comes as no surprise that it’s the midcap companies that offered their investors easy and profitable exit options during the year. The cumulative midcap company exits were at ₹48,700 crore — which is half of the total exits.

The next biggest chunk of exits came from small cap companies — at around 30% of the total — accounting to ₹29,700 crore. Large caps on the other hand saw exits to the tune of ₹19,200 crore.

It needs to be mentioned that midcaps indices ran up by 47% during the year, and small caps by 56%. Nifty on other hand went up by 20%, eclipsed by the performance of these indices.

Top PE/VC exits in 2023
Source: Nuvama Institutional Equities

Foreign players rake in the moolah

A large chunk of the exits’ proceeds went into the kitty of foreign investors. As much as 83% of the deal amounts – that’s ₹81,200 crore were foreign investors like Softbank, Warburg Pincus, Baring Asia, Bain Capital and more.

Softbank however saw the chunkiest of exits especially after the stocks of Zomato, Delhivery, PayTm, PB Fintech provided it with exit options. Warburg Pincus exited from companies like IDFC First Bank, Cams Services, Home First Finance, Kalyan Jewellers, Fusion Microfin and PVR Inox.

Among India-dedicated funds, Fairfax Holdings, Blume Ventures, Lighthouse and Peak XV Partners exited their investments in small and midcap companies.

The sector that saw the sharpest run-up during the year also provided its investors with the most exit moolah. Financials accounted for 45% of the total exits at ₹43,500 crore. Consumer discretionary came in second with ₹17,800 crore.

IT also saw a good show of ₹12,400 crore thanks to the chunk deal of Baring Asia from Coforge. Healthcare and industrials came in next.